Investment Vehicles & Company Law

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South Africa affords investors wishing to establish businesses in South Africa a number of possible investment vehicles, ranging from companies to business trusts and joint ventures. The most common form of investment vehicle used in South Africa is a private limited liability company. A foreign entity may also conduct business in South Af​rica without registering a local subsidiary, although in certain circumstances it may then have to register as an external company.

The incorporation, registration, organisation and management of companies and the capitalisation of profit companies are governed by the Companies Act, No. 71 of 2008 (the Act).

Each type of company must comply with specific reporting and accountability requirements. The Act prescribes the management structure for each type of company. The board of a company has the authority to exercise all of the powers and perform any of the functions of the company, except to the extent that the company's constitutional document provides otherwise. Directors are subject to common law duties as well as statutory duties.

“Fundamental transactions”, including the disposal of all or the greater part of the assets or undertaking of a company, schemes of arrangement, and amalgamations or mergers, are also governed by the Act. Shareholders who object to any of these transactions may demand that the company purchases their shares and compensates them in cash for the “fair value” of the shares they hold, subject to compliance with certain requirements. Transactions which result in the acquisition of control or change in control of public companies and certain private companies are regulated by the Act and takeover regulations.

South Africa's company law regime seeks to promote and facilitate commercial enterprise while protecting the interests of the various stakeholders of such enterprise, namely its shareholders, creditors and employees.

“The most common form of investment vehicle used in South Africa is a private limited liability company.”

For a comprehensive document outlining the implications of this area of law in South Africa
click here.​​

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